LexGOQII TECHNOLOGIES PRIVATE LIMITED versus SOKRATI TECHNOLOGIES PRIVATE LIMITED
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[2024] 11 S.C.R. 530 : 2024 INSC 853 Goqii Technologies Private Limited v. Sokrati Technologies Private Limited (Civil Appeal No. 12234 of 2024) 07 November 2024 [Dr Dhananjaya Y Chandrachud, CJI, J.B. Pardiwala* and Manoj Misra, JJ.] Issue for Consideration Issue arose, as to the correctness of the order passed by the High Court dismissing the appellant’s application u/s.11 of the Act, 1996, seeking appointment of an arbitrator to adjudicate disputes and claims in terms of Clause 18.12 of the Master Services Agreement executed between the parties. Headnotes† Arbitration and Conciliation Act, 1996 – s.11 – Scope of inquiry under – Standard of judicial scrutiny – Master Services Agreement between the appellant and the respondent – Dispute between parties – Application by the appellant u/s.11 of the Act, seeking appointment of an arbitrator to adjudicate disputes and claims in terms of Clause 18.12 of the Master Services Agreement – Rejected by the High Court holding that although the audit report highlighted poor returns on investment and inconsistent metrics, yet it did not support the assertions made by the appellant regarding fraudulent practices of the respondent – Correctness: Held: Scope of inquiry u/s.11 is limited to ascertaining the prima facie existence of an arbitration agreement – On facts, the High Court exceeded this limited scope by undertaking a detailed examination of the factual matrix – High Court erroneously proceeded to assess the auditor’s report in detail and dismissed the arbitration application – Such an approach does not give effect to the legislative intent behind the 2015 amendment to the 1996 Act, which limited the judicial scrutiny at the stage of s.11 – Frivolity in litigation too is an aspect which the referral * Author [2024] 11 S.C.R. 531 Goqii Technologies Private Limited v. Sokrati Technologies Private Limited court should not decide at the stage of s.11 as the arbitrator is equally, if not more, competent to adjudicate the same – Limited jurisdiction of the referral Courts u/s.11 must not be misused by parties in order to force other parties to the arbitration agreement to participate in a time-consuming and costly arbitration process – Existence of the arbitration agreement in Clause 18.12 of the MSA not disputed by the respondent – Question whether there exists a valid dispute to be referred to arbitration can be addressed by the Arbitral Tribunal as a preliminary issue – Order passed by the High Court set aside. [Paras 18-21] Case Law Cited Indian Oil Corporation v. NCC Ltd. [2022] 13 SCR 660 : (2023) 2 SCC 539; B & T AG v. Ministry of Defence [2023] 7 SCR 599 : 2023 SCC OnLine SC 657; Sushma Shiv Kumar Daga & Anr. v. Madhur Kumar Ramkrishnaji Bajaj & Ors [2023] 15 SCR 909 : 2023 SCC OnLine SC 1683; In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899 [2023] 15 SCR 1081 : 2023 INSC 1066; SBI General Insurance Co. Ltd. v. Krish Spinning [2024] 7 SCR 840 : 2024 INSC 532 – referred to. List of Acts Arbitration and Conciliation Act, 1996; Stamp Act, 1899; Insolvency and Bankruptcy Code, 2016. List of Keywords Scope of inquiry u/s.11 of the Arbitration and Conciliation Act, 1996; Standard of judicial scrutiny; Master Services Agreement; Appointment of arbitrator; Fraudulent practices; Prima facie existence of arbitration agreement; Arbitration application; Frivolity in litigation; Limited jurisdiction of the referral Courts; Arbitration agreement; Time-consuming and costly arbitration process; Judicial interference; Referral Courts; Arbitral Tribunal. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 12234 of 2024 From the Judgment and Order dated 30.04.2024 of the High Court of Judicature at Bombay in CAA No. 6 of 2024 532 [2024] 11 S.C.R. Digital Supreme Court Reports Appearances for Parties H.D. Thanvi, Nikhil Kumar Singh, Achal Singh Bule, Rishi Matoliya, Advs. for the Appellant. Ms. Shweta Bharti, Jyoti Kumar Chaudhary, Nicholas Choudhury, Jatin Chaddha, Vineet Dwivedi, Advs. for the Respondent. Judgment / Order of the Supreme Court Judgment J.B. Pardiwala, J. 1. Leave granted. 2. This appeal arises from the final judgment and order dated 30.04.2024 (“impugned judgment”) passed by the High Court of Judicature at Bombay in Commercial Arbitration Application No. 6 of 2024. The High Court dismissed the application preferred b
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